transforming from a traditional to a digital insurance...
TRANSCRIPT
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Digital transformation
Current impact & effect of Digital What do we know about Digital?
Future (uncertain) effects on our business model What do we not (fully) know about Digital yet?
Implications for our target picture and strategy How do we respond?
3
Digital technologies are converging and creating unprecedented
rates of change
SOURCE: McKinsey Global institute
1,7–6,2
2,7–6,2
0,2–1,9
1,7–4,5 Advanced robotics
3,7–10,8 Mobile Internet
Cloud technology
Internet of Things
Autonomous and near-
autonomous vehicles
5,2–6,7 Automation of knowledge work
Annual economic impact1 of selected digital technologies by 2025 USD trillion, annual
Scenarios
Conservative Agressive
X–Y
1 Defined as additional GDP + consumer surplus due to specific technology
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@pontifex with
> 9m
followers as of April 2016
4
The change brought by digital is affecting every aspect
of our lives
5
We need to increase pace of our innovation as more and more
start-ups will arrive
2011 09
5,000
05
500,000
2000
5,000,000
50,000
Source: Upfront Ventures
Cost to launch a tech start-up, USD
Open source
software
Cloud and
Amazon Web
Services
1 Global annual insurance premiums
Death by a
thousand cuts
When start-ups succeed,
they take commas rather
than basis points from
incumbents
$3.8 Trillion1
$3.8 Trillion1
6 Source: CB Insights
InsurTech funding, USD millions
2013 2014 2015
223
740
2,651
Industry heavyweights and
Internet giants also attacking +
InsurTech investments have increased by 10 times in 2 years
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Digital transformation
Current impact & effect of Digital What do we know about Digital?
Future (uncertain) effects on
our business model What do we not (fully) know about Digital
yet?
Implications for our target picture and strategy How do we respond?
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10
0
30
50
20
70
40
60
15 10 05 2025 20 90 70 65 1960 95 2000 80 85 75
Digital will lead to a major shake-up of all industries
Projections
based on
current data
SOURCE: CB Insights based on data from Innosight/Richard N. Foster/S&P
Driver of change: creative
destruction [Foster, 2001]
Macro changes shifting markets
Customer behavior
Technology
Inability of incumbents
to respond
Low-cost and high speed and lean
operations and IT
Redesign of business models to
adapt to new needs and economic
realities
+
Average company life span on S&P 500 index (years)
10
2015 2035 2050 2000
Conservative
Partial automation
Self-driving
technology
100
20
0
15 - 30%
premium
decrease
Premiums for
OEM systems
and product
liability
insurance
(indicative)
40
60
80
In Motor, signs of change are already visible – leading to shrinking
premiums in traditional businesses Disruption of motor insurance by car automation Motor-insurance-based model
"Motor" as the anchor product to up-sell into
other insurance categories; also as base product
to fund agency models
Source: Schedule P data; national highway and Rand data; assumption: 3% inflation
Relative premium in constant USD (recent and projected), indexed at
2016 value
… Health
Accident
Liability
Building, household
Life
Motor
?
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Simultaneously, several megatrends already today visible –
without knowing which one exactly will change the world
Rapidly growing start-
up ecosystem
Creative and broad
funding sources
Current "hypes" Next thing with transfor-
mational impact
We don’t know what
will happen – just
that it will
3D
printing
Robo Advice Augmented/
virtual reality
Block-
chain
"Nano-
technology"
Customer
expectations
& rapid
adoption
Significantly
reduced
factor & setup
costs
Economies of scale, scope + network effects
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Digital transformation
Current impact & effect of Digital
What do we know about Digital?
Future (uncertain) effects on our business model What do we not (fully) know about Digital yet?
Implications for our target
picture and strategy How do we respond?
13
FOMO (Fear Of Missing Out) mindset FOMM (Fear Of Making Mistakes) mindset
Are we focused on defense … … or offense?
Yes, tons of start-ups that
might affect our industry
will fail …
… but it is the ones that
survive that will become
the problem
Here is why disruptors will fail
"hey don’t have our balance sheet …"
"Supply chain is complex …"
"Our portfolio is stable – our success for the next
30 years booked …"
"We’ve been doing this for 140 years …"
"Clients trust us. They won’t trust some start-up …"
"We have a cost advantage …"
"Our risk management capabilities are proven …"
Response to disruption is shaped by the organization's mindset
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Insurers will have to profoundly change their business
models via global digital transformation
From traditional models ... … to the digital insurance of the future
▪ Complex products same as
30 years ago
▪ Fragmented LoB covers
▪ Simple, easy to understand; fully digitized
with modular structure
▪ Comprehensive, “360 degree” customer solutions
Products
▪ Paper-based, limited digital support ▪ Fully leveraging digital channels Customer
communication
▪ Agency or broker-based ▪ Digital distribution
- Multi-channel/access for mature markets
- Digital-/online only business models
Distribution
▪ Local solutions the norm ▪ Global collaboration driven by a Single Digital Agenda Collaboration
models
▪ Purely actuarial driven ▪ Big Data & actuarial driven Offers/pricing
▪ Handling of loss after damage has
occurred ▪ Via enhanced customer experience & value delivered
across insured topic Value generation
▪ Ecosystem for Allianz products vital part of value
proposition
▪ External innovation rarely used Ecosystem &
ext. innovation
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To be successful in the digital world, we combined core topics under one
Single Digital Agenda
Digital
integration
roadmap
5 Digital Strategy 1 Digital by default as a core pillar of the corporate strategy
Digital Value
Capture 2 A B
Transform your core business and develop new ones
Digitally re-think existing
business
Innovate new revenue
streams
Single digital
agenda
Digital culture,
talent and orga-
nization 4
Transition to a digital way of working
Structure Leadership
Agile operating
model and
culture Talent
Foundational
Digital
Capabilities 3 Advanced
analytics Next Gen IT
Digitally
enabled
operations
Customer
centricity
Build critical capabilities required to rapidly scale digital
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Allianz will be connected to start-up ecosystem via scouting and
intelligence activities in 5 search fields Search fields in focus of start-up ecosystem (examples)
Mobility Connected
property
Digital health InsurTech and
wealth
management
Cybersecurity
and data
intelligence
Robo advice,
digital broker,
claims
management
Cybersecurity,
digital identity,
artificial intelligence,
analytics
Car management/
telematics, mobility,
management
Property manage-
ment and security
Prevention, patient
adherence, self-
servicing